Assam’s Budget Blues: How Lower Growth Could Impact Fiscal Health in FY26

Image Source: Northeast Live

Assam's FY26 fiscal prospects are challenged anew, with India Ratings and Research (Ind-Ra) cautioning that the state will miss its fiscal goals as a result of growth in Gross State Domestic Product (GSDP) coming in lower than anticipated. The budget of the state had estimated 15.2% GSDP growth in FY26, but Ind-Ra now expects it to be around 14%, resulting in possible slippages in deficit and debt ratios.

Key Highlights:

Ind-Ra predicts Assam's FY26 fiscal deficit to be 40 basis points above the budget estimate, driven largely by the projected decline in GSDP growth and sluggish revenue collection.
Revenue receipts during FY26 may fall short by Rs 55.2 billion from the budgeted estimate as growth assumptions on tax revenue are perceived to be negative and non-tax revenue estimates are perceived to be positive.
The state own tax revenue (SOTR) is also likely to increase only 2% in FY26, and the SOTR/GSDP ratio should stabilize at 5%, just marginally less than the revised estimate of FY25.
Centre grants are also likely to fall short of budgeted levels, with Ind-Ra estimating actual receipts at 70% of the FY26 estimate.
Budget expenditure estimates for FY26 have been viewed as reasonable with marginal cuts in revenue and capital expenditure growth owing to a high base effect.
Even as the government has attempted to keep spending in check, the anticipated shortfall in revenue could lead to a Rs 29.7 billion slippage in revenue as well as fiscal deficit.
The debt-to-GSDP ratio is expected to be 60 basis points above the budgeted 25.7%, and gross market borrowing could increase to Rs 225 billion in FY26.

Fiscal planning by Assam for FY27-FY31 has been viewed as optimistic, with nominal GSDP growth set at 17% annually, a number that Ind-Ra considers ambitious based on recent trends.

Source: BusinessWorld